Florida Company Buys Lillian Vernon

The Virginian-Pilot, May 31, 2006

Gregory Richards

VIRGINIA BEACH — Direct retailer Lillian Vernon Corp. was sold Tuesday to Sun Capital Partners Inc., a Florida-based investment firm, according to a top Lillian Vernon official.

Lillian Vernon’s large distribution and call center near Lynnhaven Mall is expected to be unaffected by the sale, said Tom Scott, the retailer’s executive vice president of operations and chief information officer.

The facility’s employment levels, which expand from 600 workers during the spring and early summer to about 3,500 people as the winter holidays approach, should stay the same, Scott said. The company, a catalog and online retailer selling gift, household and fashion products, is one of the city’s largest private employers.

“It changes practically nothing down here, virtually nothing,” Scott said of the sale.

Representatives of Sun Capital, based in Boca Raton, could not be reached for comment Tuesday afternoon. However, Sun Capital officials will be at the Virginia Beach center today to discuss the sale with employees, Scott said.

The deal involves two private companies, Sun Capital and Lillian Vernon’s parent company, Direct Holdings Worldwide LLC of New York. Terms of the sale were not disclosed.

In 2003 Direct Holdings paid $60.5 million to acquire Lillian Vernon, then a public company.

With the Lillian Vernon purchase, Sun Capital owns 56 companies, including such names as Catalina Lighting; Eljer, a plumbing supply manufacturer; Mervyns, the department store chain; and Nationwide Furniture, according to its Web site. Sun Capital invests in companies “which typically have the number one or two market position in their industry, long-term competitive advantages and significant barriers to entry,” the site says.

Sun Capital has used its $3.5 billion of equity mainly to invest in the retail sector, which represents 40 percent of its holdings, as shown on the site.

Scott said the sale was “exciting” because of Sun Capital’s background in specialty retail and direct marketing. At one point, he noted, the investment firm owned Miles Kimball, another direct marketer of gifts and household products.

“Is this sale good for Lillian Vernon? I think it’s a great thing for Lillian Vernon,” Scott said.

Direct Hol dings sold Lillian Vernon so it could focus on its media holdings, including the Time-Life Inc. book and video retail business. Direct Holdings bought Time-Life in 2004 and merged its operations into Lillian Vernon’s Virginia Beach facility.

After the sale, Lillian Vernon will continue providing call-center and distribution services to Time-Life; that work will be done under a “broad-based service agreement,” Scott said.

Last year, the combined operation sent out 7 million packages, Scott said.

Though Lillian Vernon has its distribution hub in Virginia Beach, it is based in White Plains, N.Y., where about 120 employees work in such departments as marketing, merchandising and finance. That office – and the company’s management ranks – is not expected to change with the sale, Scott said.

Scott said the name of the company, founded by Lillian Vernon at her kitchen table in 1951 with $2,000 in wedding gift money, will remain unchanged.

“That’s one of the things Sun is so excited about,” Scott said. “Forty-seven million households know the Lillian Vernon brand name – it’s a very high brand recognition for this company.”

With the Lillian Vernon purchase, Sun Capital owns 56 companies.